Subdivision and Financial/Development Contributions

The RMA allows for councils to require the payment of financial contributions to achieve the environmental outcomes expressed through its objectives and policies. The use of subdivision provisions in plans has been one of the key ways that councils have been able to assess the need for a contribution to be paid, and for collection to occur. Generally, the need for a financial contribution would be identified through a subdivision consent application, and collection would occur prior to the release of any s224C from the council.

The introduction of the Local Government Act 2002 has provided a new avenue for councils to require development contributions. Under a council’s development contributions policy, subdivision may trigger the need for a payment to council. For instance, the trigger could be when the subdivision developer seeks a service connection, which may be a necessary pre-condition for obtaining certification under s224.

The Council cannot elect to have overlapping contribution requirements under both the LGA 2002 and the RMA.

For more information on development contributions, refer to the review of Development Contributions publication on the DIA Better Local Government webpage and the Relationship between the RMA and LGA guidance note.


Subdivision-related definitions

Land tenure in New Zealand, or the means by which land is held, is derived from English law, and is limited to freehold and leasehold. Under the English feudal system all land was owned by the Crown and the Crown granted land to its tenants for feudal services. In New Zealand, the Crown has an underlying ownership of all land, which legally enables it to restrict uses of private land, or to redefine the rights granted to private owners, through legislation (such as the Resource Management Act 1991).

Along with tenure is the concept of estates in land. This was developed to deal with the fact that because land was owned by the Crown, the tenant's rights to that land need to be defined. The most common forms of estate are fee simple and leasehold. Fee-simple estates last until the owner of the estate dies intestate without successors, at which time the land ownership would rest fully with the Crown. A leasehold estate is less than a fee-simple one, and is the estate for a fixed term of years (quite often 999 years). The modern concept of land ownership is that the interest in the land is "a bundle of rights" which may be exercised in respect of a particular piece of land.

An allotment is defined in s218 of the Act as meaning:

a) Any parcel of land under the Land Transfer Act 1952 that is a continuous area and whose boundaries are shown separately on a survey plan, whether or not -

i) The subdivision shown on the survey plan has been allowed, or subdivision approval has been granted, under another Act; or

ii) A subdivision consent for the subdivision shown on the survey plan has been granted under this Act; or

b) Any parcel of land or building or part of a building that is shown or identified separately -

i) On a survey plan; or

ii) On a licence within the meaning of [Part 7A of the Land Transfer Act 1952]; or

c) Any unit on a unit plan; or

d) Any parcel of land not subject to the Land Transfer Act 1952.

Freehold subdivisions occur where new allotments (usually referred to as lots) are created under the Land Transfer Act and ownership is held in an estate in fee simple. Fee simple means that the ownership of the land and the buildings on it is held solely by those persons listed on the certificate of title. Freehold is the most common form of subdivision. The boundaries are pegged by registered surveyors and a 'guaranteed' title is issued (see Reading and Interpreting Certificates of Title for situations when titles are not guaranteed).

Leasehold subdivisions: land or buildings or both that are leased for a period exceeding 35 years is defined in the RMA as a subdivision. A leasehold estate is most commonly defined as an estate or interest in land held for a fixed term of years. Ownership is through a lease from the owner of the freehold title. Leaseholds usually operate under continually renewable terms, with a 'ground rent' payable to the freehold title owner. The leaseholder effectively buys the right to own the dwelling or building and lease the land for a certain time. The leaseholder can sell the lease, but there are often restrictions on the use of the property.

Unit title subdivisions (or strata titles) generally occur where more than one dwelling or building is built on a single title and separate ownership is required. This includes multi-storey developments and the unit title allows for ownership to be defined in three dimensions. A unit title provides single ownership of a 'principal unit' (the dwelling) and one or more 'accessory units' (e.g. garages or outdoor spaces). Each principal and each accessory unit will usually be defined spatially, so that the dwelling and any other buildings or outdoor spaces are contained in compartments of space, which are owned rather than leased. There are usually common areas that provide access for all unit title owners (e.g. driveways, lifts and stairwells).

A unit title is made up of two components:

  • ownership in the particular unit
  • an undivided share in the ownership of the common property.

In the event that a unit title is cancelled, each owner will be provided with an undivided share in the ownership of the units.

The Unit Titles Act 2010 controls such developments, and a body corporate administers the day-to-day running of the complex. Unit titles involve owners in financial and administrative activity, such as attendance at yearly body corporate meetings, decision-making with regard to changes to units, paying body corporate administration fees, and maintenance of common areas. Voting rights for a body corporate are usually equal to 1/10 of the value of the unit.

Company lease or company titles occur where the owners of the units are shareholders in a private company with occupation rights only to an individual unit. This form of lease is now rarely used. The main disadvantage of the system is the difficulty shareholders face in raising a mortgage, because there is no satisfactory security. A company lease is more restrictive than a unit title because approval of the majority of shareholders is necessary for either leasing or selling a company lease property. 'Company lease' is defined in s2.

Cross-lease subdivisions (occasionally called composite leasehold and share titles) occur where buildings or dwellings are leased. The cross-lease plan shows the dwellings as 'flats' and is often called a 'flats-plan'. A cross-lease title is a legal device for registering an interest in land. It emerged about 25 to 30 years ago as a means of obtaining mortgage security for the purchase of ownership flats. The term 'cross-lease' is used to describe the method whereby the purchaser of a dwelling/flat obtains a lease of that dwelling, generally for a term of 999 years, together with an undivided share in the underlying fee-simple estate. Although cross-leases originally involved two titles, the method has now evolved to a single-title system. This 'composite' title is a single title document recording the proprietor's proportional undivided share in the fee-simple title and an estate in leasehold of the particular flat.

Cross-lease titles usually involve common-use areas (e.g. shared driveways) and exclusive or restrictive covenant areas (e.g. backyards). The owners agree to use certain areas for their own use without infringing on the areas of the other owners. Because the owners are tenants in common of all the land, they do not trespass if they encroach on or use another person's exclusive area. They are, however, in breach of their lease, and the offended party could seek a civil remedy. It is important to note that it is the building that is being leased, not the entire land.

Any changes to be made to a cross-lease site or building require the consent of all other cross-leasing owners (e.g. to erect a garage or add a new room).

The subdivision of land (where land is defined as including the airspace above land) is defined in s218 as being:

a) The division of an allotment -

I. By an application to the Registrar-General of Land for the issue of a separate certificate of title for any part of the allotment; or

II. By the disposition by way of sale or offer for sale of the fee simple to part of the allotment; or

III. By a lease of part of the allotment which, including renewals, is or could be for a term of more than 35 years; or

IV. By the grant of a company lease or cross lease in respect of any part of the allotment; or

V. By the deposit of a unit plan, or an application to the Registrar-General of Land for the issue of a separate certificate of title for any part of a unit on a unit plan; or

b) An application to the Registrar-General of Land for the issue of a separate certificate of title in circumstances where the issue of that certificate of title is prohibited by section 226.

Survey plan has the meaning set out in the following paragraphs, in which cadastral survey dataset has the same meaning as in s4 of the Cadastral Survey Act 2002:

(a) survey plan means –

(i) a cadastral survey dataset of subdivision of land, or a building or part of a building, prepared in a form suitable for deposit under the Land Transfer Act 1952; and

(ii) a cadastral survey dataset of a subdivision by or on behalf of a Minister of the Crown of land not subject to the Land Transfer Act 1952:

(b) Survey plan includes:

(i) A unit plan; and

(ii) A cadastral survey dataset to give effect to the grant of a cross lease or company lease.

Exemptions under the Public Works Act 1981: the Public Works Act 1981 provides the Crown and local government with the power to acquire land, either by agreement or by compulsory acquisition. Where land has been taken, transferred or acquired, the Crown or local authority can direct the District Land Registrar to issue a certificate of title (for the estate on the land or part of the land) without requiring any subdivision consent under the RMA. A similar provision applies when land is being disposed of.

Exemptions for reserves under Te Ture Whenua Māori Act 1993: this exemption applies when either Māori freehold land or any general land is set apart as a Māori reservation for specifically defined purposes. The only requirement is that the Chief Executive (of Te Puni Kōkiri) declare the land to be included in Māori reservation by notice in the Gazette, after which time the land legally forms part of that reservation.

Exemptions under the State Owned Enterprises Act: these exemptions address situations where:

  • the Crown is transferring land to a state enterprise and when land that has previously been in state enterprise ownership is found to be wahi tapu and subsequently resumed by the Crown,
  • land is being resumed on the recommendation of the Waitangi Tribunal
  • land is being resumed under the provisions of the Public Works Act 1981.

Exemptions for orders under the Property Law Act 2007: this section of the Property Law Act 1952 allows the owner of a piece of land-locked land to apply to the Court for an order to have reasonable access to the land, granted by vesting any other piece of land, or creating an easement over any other piece of land, or both (in both cases whether or not that piece of land adjoins the landlocked land).

Māori freehold land came into being in two ways. Firstly, the Crown set aside land for Māori from the Māori customary land that it purchased for the settlement of New Zealand. Specific Māori individuals were granted Crown grants for joint ownership of such land. Secondly, the Māori Land Court researched ownership of Māori customary land that had not been alienated, and appointed (up to) 10 Māori individuals into joint ownership. Ownership of the land was confirmed by the Māori Land Court and title granted by the Crown.

The purpose of the Te Ture Whenua Maori Act is to facilitate and promote "the retention, use, development and control of Maori land as taonga tuku iho by Maori owners, their whanau, their hapu and their descendants".

Reference to external documents

If a plan incorporates standards contained in an external document, it should refer to a particular version of that document. If the standard is revised, the council should notify a change to its plan, replacing the old standard with the new one. This will allow public submissions on inclusion of the new standard in the plan.

However, take care with a plan which incorporates standards from an external document. These may change, and amending a plan is not a simple process. If the plan lags behind amendments to the standard in an external document, it could cause confusion.

Codes of practice or New Zealand Standards may give unreasonable discretion to the council. A discretion contained in an external standard could make a rule ultra vires if that standard is used to form a condition on a permitted activity.